When the financial head of a household passes away unexpectedly, life insurance can seem like a godsend. After all, life insurance can mean the difference between utter poverty and financial security for those who are left behind.
What many consumers do not realize, however, is that life insurance companies are for-profit businesses. They exist for one reason -- to make money. Therefore, the idea that a life insurance company simply and quickly pays out on claims after a policyholder dies is a vast misconception.
One area where we see this happen all the time is in the tragic circumstance where a person is involved in some sort of incident where their body cannot be recovered but they are very clearly deceased. Common examples of this include people who have died in airplane crashes or other mass tragedies where not all bodies can be found.
In this article, we explore the case of one life insurance policyholder whose body was lost in an accident. Unfortunately, his beneficiary learned the hard way just how unfair life insurers can be when it comes to making policy payouts.
A fun vacation turned upside down
The case centered on the death of a policyholder named Nigel. Nigel was a construction worker, a husband, and father. Nigel received a life insurance policy through his employer with a death payout of $750,000. He named his wife, Jan, as the sole beneficiary under the policy.
A few years after receiving the policy, the family went on vacation to a large lake where they planned to spend 10 days camping, water skiing, and generally just enjoying their time together. In fact, they planned their trip with three other families with similarly-aged children.By all accounts it should have been a vacation for the ages.
On the morning at issue, Nigel set out in a ski boat with two of the other dads. It was early -- hardly past dawn -- when the 3 men set out across the lake. Although they intended to enjoy a mellow fishing trip, the men decided on the way out that they would test the limits of Nigel’s brand new boat.
As the men spread across the Lake at top speed, they ran into a large log. This caused the boat to flip into the air and land upside down on the water. At the time of the accident, the men were at least four miles from shore in any direction. The water was also terribly cold.
Fortunately, another boat that was fishing nearby heard the accident an headed straight toward Nigel’s overturned boat. When they got there, they discovered the other two dads treading water but Nigel was nowhere to be seen. In fact, the other two men reported that they never saw him come back above water after the accident. Police arrived at the scene about 1/2 an hour later and divers undertook an extensive search for Nigel. His body was never found and his friends and family presumed he was dead.
In part, this presumption was due to a police report from the incident stating that given the cold temperature of the water and the distance from shore at the time of the incident, there is no way anyone could have survived in that water. In other words, the police presumed that Nigel had perished in the accident.
No body, no payout
After a couple of months had passed without Nigel’s body ever being recovered, Jan decided it was time to make a claim against his life insurance policy. In doing so, Jan submitted a stack of paperwork requested by the insurance company, including the above-referenced police reports.
Within a matter of weeks, Jan received a letter from Nigel’s life insurance company. The letter stated that they were unable to pay her claim at that time because there was no proof that Nigel was, in fact, dead. To Jan and anyone who knew the details of the incident, this reasoning was ludicrous. There was simply no way Nigel could have survived the accident. Even if he had, there was no chance that he would not have contacted his family afterwards.
Concerned that she was going to lose their house if she didn’t receive the death payout, Jan contacted an attorney who specialized in the wrongful denial of life insurance claims. The lawyer explained to Jan that these cases were always difficult. Life insurance companies typically needed a death certificate in order to even consider paying out on a claim. Because the authorities had not ever recovered Nigel's body, they had not issued a formal death certificate. All Jan had to prove Nigel’s death was the police report indicating how unlikely it was that Nigel had survived the incident.
The attorney had worked with this particular life insurance company before, and knew that it happened to be one of the more legitimate life insurers in the marketplace. He had successfully negotiated the overturn of claim denials with this company in the past and thought he might be able to do so in this case as well.
He put together a packet of materials that included sworn witness statements and expert witness reports pointing to the inevitable conclusion that Nigel was dead. He also submitted evidence of Nigel's happy and fulfilling life to suggest this was not a man who would simply disappear on his family. Ultimately, the attorney was able to negotiate they payout on the policy for Jan and her children. That result was not a forgone conclusion, however. More than likely, it was principally due to this attorney’s good reputation with the life insurance company and his thorough presentation of evidence.If you are experiencing a denied or severely delayed payment on a life insurance policy, please contact our firm immediately. We specialize in the wrongful denial of life insurance claims and would be happy to provide a free consultation on your chances of having a claim denial overturned. Call us today. We're here to help.